PBGC’s deficit increases to $36 billion

The Pension Benefit Guaranty Corporation’s (PBGC) deficit increased to about $36 billion in FY 2013, due largely to the declining financial condition of multiemployer plans, according to the PBGC’s annual report.

The PBGC’s growing deficit “is a reminder that our current resources are inadequate,” said PBGC director Josh Gotbaum. “Without adequate funding we can’t pay benefits or preserve pensions,” he added.

Multiemployer plans provide lifetime income to more than 10 million people in 1,400 plans, working for hundreds of thousands of businesses in industries such as construction and manufacturing. Because more plans will fail within the next decade, the PBGC’s multiemployer insurance program’s deficit rose to more than $8.2 billion, compared with $5.2 billion last year.

However, the deficit in the program for single-employer pension plans narrowed to about $27.4 billion, down from $29.1 billion in 2012. The program insures the pensions of nearly 32 million workers and retirees in 23,000 ongoing plans sponsored by private-sector employers. The single-employer program’s potential exposure to future pension losses from financially weak companies was estimated at about $292 billion compared to about $295 billion last fiscal year.

Customer service

Retirees receiving benefits continue to rate the PBGC as one of the best in government for its commitment to customer service, the PBGC reported. The agency ranks in the top 3% in a survey measuring 154 categories of customer responsiveness. Retirees gave the PBGC a score of 90 on the American Customer Satisfaction Index (ACSI), more than 20 points above the government average. A score of 80 or higher is considered excellent, whether for a government agency or a private business.

Source: PBGC News Release No. 13-14, November 15, 2013.

For more information on this and related topics, consult the CCH Pension Plan Guide, CCH Employee Benefits Management, and Spencer’s Benefits Reports.

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